Tuesday, October 27, 2009

Cell C Rejects Interconnection Rates As MTN, Vodacom Agree

South African cellcos Vodacom and MTN have reportedly reached an agreement regarding interconnection rates, although the country's third operator Cell C has rejected the proposal, local daily Business Day reports. The three companies have been debating a reduction in mobile termination rates (MTRs) following an order by the government to implement a cut by the end of November.

A state committee proposed that rates should be cut to ZAR0.60 (USD0.08) per minute during peak times and then by a further ZAR0.15 annually until 2012. Operators currently charge each other on average ZAR1.25 per minute during peak times. However, carriers have opposed the cut, describing it as 'drastic' and 'below cost.'

Cell C CEO Lars Reichelt said that the ZAR0.60 proposal was 'too strong and not rooted in reality.' MTN and Vodacom also opposed the cuts, claiming that to implement the proposed measures they would have to also cut jobs. Instead the two companies have agreed to reduce MTRs by around 19% immediately, with further reductions planned year-on-year for the following three years.

The two companies have applied for regulatory clearance from ICASA to implement the cuts. Cell C, however, said that it would not support the decision, calling the bilateral cut in interconnectivity prices 'too small'. Cell C had previously proposed an asymmetrical system which was not supported by MTN and Vodacom.